• by Karlene Lukovitz  @KLmarketdaily, August 8, 2023

This morning, Nextstar reported that its advertising revenue fell by 17.4%, or $87 million, year-over-year in Q2. 

That reflected a 2.2% decline in core advertising, to $404 million, and a 90% drop in political advertising, to $9 million. 

Most major national and local TV owners have reported ad declines for Q2, reflecting this year’s softening in advertising spend. 

The company, which has ABC, CBS, Fox and NBC broadcast TV affiliates, saw distribution revenue rise 7.7%, to $696 million, digital revenue rise 11.4%, to $98 million, and other revenue rise 200%, to 33 million.   

Total net revenue was down 0.4%, to $1.24 billion. 

Income from operations dropped 46.4%, to $179 million, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) dropped 32.3%, to $331 million, and net income dropped 66.8%, to $75 million. 

Excluding the The CW network, in which Nexstar acquired a majority stake in September 2022, the company’s net revenue was down 6%, to $1.17 million, and adjusted EBITDA was down 17.2%, to $405 million. 

The TV group turned a profit of $153 million in the period, while the The CW network lost $78 million. However, that was an improvement over the $83 million loss sustained by CW in Q1.

Nexstar CEO Perry Sook said the company plans to achieve its goal of profitability for The CW by 2025 through a "moneyball" content-spend strategy that includes acquiring dramas, comedies, reality and sports programming -- a strategy that should work to its benefit during the current writers' and actors' strikes. 

"Subsequent to quarter-end, The CW entered into sports programming agreements to carry ACC football and basketball beginning in September 2023 and the NASCAR Xfinity Series beginning in 2025, both of which are expected to accelerate viewership and revenue growth for The CW ecosystem," he said in a statement. "In addition... NewsNation remains the fastest-growing cable news network in primetime...

“Nexstar again outperformed consensus expectations in the second quarter across all key financial metrics including net revenue,” Sook said. “Looking forward, we expect the balance of 2023 will continue to reflect our ability to outperform the overall advertising market and benefit from renegotiated distribution contracts representing more than half of our subscribers at the end of 2022, partially offset by the ongoing impact of negotiations with certain distribution partners. We are even more excited about 2024 as Nexstar will realize upside from presidential election year political advertising, additional distribution contract renewals this year, a slowing of losses related to The CW Network, as well as expectations for a declining interest rate environment and a recovering economy. Given Nexstar’s exciting growth initiatives, robust free cash flow generation, solid capital returns to shareholders and our modest leverage, we remain well positioned to deliver enhanced value to shareholders.”